Predictive Analytics and Complex Event Processing Technology Move to Cutting Edge of Financial Services Industry

By Nathan Conz and Melanie Rodier , FinanceTech

By leveraging predictive analytics and pattern analysis technologies, financial services firms are able to understand their customers, their operations and their markets in greater detail. Perhaps more important, they are able to identify and react to trends as they emerge, staying ahead of the curve — and the competition.
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In insurance and banking, predictive analytics often are used to segment valuable customers and anticipate the types of products and services that will attract their new business or increase their loyalty

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While predictive analytics can be used to identify the most-desired customers, the technology may be equally valuable when used to identify the least-desired customers — those likely to commit fraud.

One firm that reportedly is planning to adopt pattern analysis technology to protect its network from unauthorized access is JPMorgan Chase. The bank already has been using the technology in its retail banking services to track credit card fraud. But, according to industry insiders, it is now preparing to use the technology for its securities services, too. JPMorgan Chase declined to comment.

Securities regulators also are implementing pattern analysis technology, particularly under its most evolved form, complex event processing (CEP), to help stop insider trading. CEP uses analytic techniques such as event streams processing, event correlation and abstraction to detect complex patterns among many events and relationships between events, such as causality and timing.
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Overall, Boston-based Aite Group estimates that revenues for CEP-related products will quadruple in the next two years, reaching $460 million by 2010. The broader event processing (EP) category — which comprises a range of applications that facilitates the aggregation and processing of event data — will reach $1 billion, Aite says.

“[CEP] is the next big thing,” contends Joe Rosen, president of RKA, a New York-based management consulting firm that advises on the use of technology in the global capital markets. “In the capital markets where you have need for lots of data, you have to have this kind of technology.” Read the news article.